AZPN - Earnings call 1 2024 | Aspen Technology, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the AspenTech 2023 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Brian Denyeau from ICR. Please go ahead.

Brian Denyeau

Thank you, operator. thank for joining fiscal the September XXXX. and our to XXXX everyone, XX, results financial first afternoon, you us for discuss ending Good quarter of President call CFO. Antonio With Breithaupt, today on and Chantelle the Pietri, me AspenTech's and CEO; AspenTech's are

have forward-looking presentation earnings report presentation opportunity we Slide today's from in Factors Starting forth Actual these Form subsequent other in and conjunction on IR on differ include investors made that statements. that contemplated X, an that we statements. our set annual will you like remind results are on today's this -- may with to XX-K the ask and ask press to posted materially forward-looking SEC. to we results materially those I refer note, filings differ release our could website, today Please and we to take would with these cause this call. remarks our by in

we call as a Any we or to statements these statements of are update undertake of no on new and as assumptions that future result information today, forward-looking on obligation based make events. this

both presentation, measures. reconciliation is non-GAAP let turn available are Antonio? GAAP Relations With certain During we Investor website. A and measures earnings the GAAP that, Antonio. included me both to financial non-GAAP press today's to which of this of in call release present presentation, and investor on over our

Antonio Pietri

to X. takeaways thanks call. you and for today. Slide key These Brian, Thanks, X on joining all the of for us are Beginning today's

ACV which delivered growth. a was quarter, solid double-digit QX again First, once

and to our the start focus execution running and We from have the ground new fiscal hit year, expansion. shifting transformation integration to

meet strong More are profitability our most their in and customers and positioned uniquely than Second, solutions ever, to objectives. sustainability markets. help remains demand mission-critical and products end

sustainability many are Third, signs market growth pathways to different we see promising opportunity. across of our that continue expanding

their confident our achieve targets full to partnership, and help sustainability against cases. remain guidance the deliver co-innovation fiscal collaboration customers to new use are in and in existing encouraged potential ability about the year. we different objectives highly for We our through fourth, And

Our is investments example and scalability model. free great while expand of ACV growth of strategic for also margins generate to making a our ability the cash double-digit growth business flow

Looking free was detail, in cash our million, at quarterly more contract million. annual or results $XX was year-over-year. XX.X% value, And flow ACV, increasing $XXX

to As cash stated due our cash is in I collections our flow quarter, the generally of last lowest in business. seasonality QX

I the our and Slide conditions to upstream growth, an end in Turning their oil X. experiencing are recent persistently especially dynamics remains excluding higher from demand strong, environment, healthy national on with energy, markets, demonstrating now will announcements where oil and supply market by companies. in demand, we're the seeing demand favorable with In increased update provide U.S. CapEx customers midstream tight acquisition confidence Strong a prospects. and prices combined majors long-term to led has upstream industry's oil investments, chemicals.

is increasing CapEx at production a as rate major supply, rates depletion also is targeted oilfield existing of sustaining only the at of not investment area focus. oil but

With chain, value now to the optimize in positive these and and we suite, more demand the cycle of markets offer AspenTech to manage life SEC can for even the compelling entire forward. we going addition expect solution an remain

support fundamental reducing refiners well drive strong ability on life digitalization remain through through in asset sustainability. remain to therefore, higher same increasing and positioned rationalization investments, initiatives where capacity OpEx focused CapEx over operational for fuels combination their from a and remain efficiency have owner fluctuated while demand refining, the and X North a as benefit industry margins of extending players role. operators to improve last America. spans In targeting with and our emissions months, in efficiencies improvements We plays they Europe The and

E&C customers and projects, pipeline optimism. energy traditional driving are energy transition both benefiting CapEx higher in industry and trends positive from

the we by this growth market. As see seen customers we that we will in the ultimately historically support mentioned and than encouraged faster end and have they believe have trends We're the continue. will past, in sustainability we expect with less E&C cyclical initiatives

chemicals the to The manage remains weaker support environment for calendar first costs consistent in industry this half of as demand. response to operating players with year, margins

help this drive market, plastic confidence that and from development faster impacting this the as deliver chemicals of emissions interested and we AspenTech solutions is chemicals growth in customers the waste market accelerate efficiencies, gives economy. our will While the remain in growth vertical us reduce circular improve. This to conditions

T&D power industry and expand, and remains being as grid. to funding. by significant the increasing and ongoing the consumer modernize for strengthen renewables of and investment from in demand immense cycle demand electricity, is robust industrial benefits government the Finally, rapid This industry an adoption driven

of be predicted and suite. aim for The For used and example, annual through our networks, digitalizing expected we're in global strengthening net nearly is needed recent grid demand. XXXX distribution well meet grids, will expanding the that $XXX XX% International to this of that road IEA's X map of XXXX its the predicts all prepared IEA in support electricity Agency's by Energy DGM or update investment help the for to most billion also which increase investment to with

a growth long-term remains on it this bullish for forward. are potential and the strategic area key going of market, We investment

Slide our off as X. the update on like to sales we an to provide kicked Turning efforts year. I'd

will Emerson and combined on capitalize ahead. we're increase in then. making the commercial We effort made fourth began opportunities with see years As of have new X, quarter markets. relationship, fiscal business I both capacity on progress in sales across our this the to this and the us in existing XXXX highlighted We process investments Slide numerous this significant we our enable to believe in growth since investment,

fiscal start of XXXX this in realize from impact to and benefiting beyond. expect and the full capacity end additional XXXX We towards fiscal its

to around additional like now closed the color quarter. in provide I'd some transactions software

breadth recognize to and and today development for value continue of meet businesses, needs customers their our objectives. innovation exceptional the to long-term both their their Our

while new with deepening have business customers. As to a relationships also result, we win our continued existing

is The from first role leader gases that traditional expanding the a the its the of a of green customer in to is in become gases production leader world in industrial industrial in production process reference hydrogen. of

suite As This growth investment foundational going part renewables. design technology hydrogen, using explore standardization entitlement of green technology doubled estimate our to further this for this ammonia for their offerings on customer our their is and green as plans objectives, software journey, next-generation and process with to engineering ambitious token customer forward. cost

a more with business fuel to its us, This them to our of with and going than double we're transaction the leading our builds cases capabilities continue explore forward. The alternative development. suite partnering condition second to excited that additional decided customer in their with use and on intention long-standing citing the relationship is in latest refiner customer, engineering

following plan forward. for additional products, them license a Third, large-scale relationship platform, our is manage expand way a Monarch with strength its DGM, transmission utility a us network secured to the continue incumbent transaction we we in recognizing U.S. search and, to a with going of chose perpetual This power interested over in competitive better the was to process. working utility. and DGM suite of customer This the

existing asset would or operations this of displaced The efficient a be to incumbent an through partnering identify control We fourth process and with and a base its differentiator. in sustainable that and continue plant valuable for this technology where in confident from manufacturer. the us pursuits forward. collaboration customer's insights value its business Emerson's global in our more final with of see references Emerson remain paper installed the room our V going leading and across process relationship Delta adaptive and key ability our Emerson, expansion helped we base customer pulp into provided with evaluation

energy Moving and technologies The material would to the provide development sustainability to global of significant novel Slide to of to into opportunities continue seeing. can scale net X. drive achieve I and megatrends the that an on targets ambitions. the update X like existing investment transition customers' we're

sustainability our most is our in in assets their support This initial still As increased suite as in phase. which customers' design manifested use represents solution type this spend, engineering ongoing to growing. of these is through of drives growth interest are and projects today, a interest market in CapEx and result, this our

time, and asset and over chain and a see the management to performance entire expect from phase maintenance. we from asset However, benefit as operation since supply to our manufacturing sustainability-related we cycle asset well, the in value suite projects across basic design life customer provide

compelling moment of land expand and customer and ago many sustainability. of example we to see different mentioned is these projects a reference around excellent in an hydrogen continue The opportunities, areas other green

in still companies advanced high-velocity several companies our stages testing sustainability-related quarter and We're about forward. these digitalization We and carbon as and team. renewable solutions also leveraging initiatives included journeys won a opportunities the fuels green the initial capture, batteries. in These in hydrogen, recycling, By that sales wins companies to sustainability our specific through of later-stage start-up up have technology, their into going are potential development the areas them cases. excited use developing scale help plastics their such

QX, update to and product innovation resulting update later run [ Turning this initiatives. month. hybrid areas. the system, enhancements learning ] their upgrades help sustainability new portfolio to power release and our capabilities their our longer now to expansion software generation on of will enhance XX.X drive and provide our machine version library of I our control and assets our products we across faster, an These a to will Emerson's version neural across functionality, of safer, In XX many new ovation among include innovation net in greener, other application X. planned Slide for integration customers to current continued modeling

helping the on reach quarter. focused remain in their also partners co-innovation goals We through our sustainability

help product help other of navigate significant strategic released design for This sustainability ArCAT pathways. have and customers be example, help incorporate our its management carbon over to process to license informed customers the we their strategies. customers as optimize in more management sustainability from we multiple their carbon will productization Aspen's consider the simultaneously potential strategies. initial to X product holds constraints pathways. Aramco, In should economics, And better also completed to For make decisions operating the time, ], capabilities technology release, [ planning

accelerate integrated in announced the to relationship expanding as with company OMV energy company's multinational transition we're based Austria, energy afternoon, Group, initiatives. Additionally, this a our

chain in the their better fuels step first simplified, integrated industrial supply a develop chain. on helping by and this and renewable a we OMV's data will supply strategy partnership, fuel As optimization across them chemical model leverage focus

with sustainability our turning free support demand higher minimal. Middle flow we're the is cash has dynamics, goals consistent investment ongoing beginning the Now energy for of growth X. year, conflict in monitoring remainder coupled confident I fiscal XXXX. innovation. the of of Industry million. deliver will on in and far been XX.X% least expectations to We at to at East for our strong the Slide trends and driving our demand greater remain our levels initiatives, market ACV outlook ability discuss least which to so of operational at Macro for efficiency, and remain transition impact potential with any for the $XXX closely

also update give an AspenTech like on would to I Israel. the team in

physical mental the remain team to been on make can sure all members continue of we has and focused priority will employees. our there. affected we We we're support these, our doing to safety that and Our

to to this event Israel and those directly want extend also We impacted by the and condolences throughout indirectly in all heartfelt region. our

down weeks On all ago, the end and from at her and team partner few Chantelle of contributions Chantelle will behalf like the a a next announced AspenTech, to her has great stepping I'd many chapter been at role the her December. CFO for the her a here entire thank be me to career. leader her as best the in wish for here of as organization. of Lastly,

Stagno, SVP into time Officer, We CFO. should CFO and we to step to departure complete interim Chantelle's need Chris Accounting search for have a role full permanent Chief confidence the additional in after our

now over to would of like a I to call for financial discussion the results. QX Chantelle? that, our Chantelle turn With

Chantelle Breithaupt

forward. proud Antonio. words, AspenTech. X.X highly to kind has of years we vision Thank growth bottom commitment Antonio, I'm serve confident and as have a CFO the company. Chris AspenTech's at privilege you team and to and to the the to going with and ability past for committed your entire accomplished, a successful remain delivering ensure top continue in very what line working strong of the been am It for I leadership, appreciative I to I'm transition.

XXX Turning ASC to results. Topic our I'd explanations our to on highlighting by out of impact presentation performance. QX like regarding the start financial that our includes earnings

annual of available together website. other presentation to refer among now our free our investors on definitions with ask We these value, We in ACV, flow, have also contract call. included that IR cash or bookings earnings and today's metrics, definitions

Slide X. quarter quarter-over-quarter. up of and in first year-over-year contract value on million Starting the X.X% was XXXX, $XXX Annual fiscal XX.X%

As sees typically of a cadence. reminder, given number closed the our sales transactions QX lowest historical

first in $XX or Inmation, In growth the transformation and of from onetime approximately our ACV of X.X performance acquisition million points quarter of addition, SSE XXXX net new ACV sequential XXXX. integration fiscal and represented which together fiscal of of in QX benefits included

Total $XXX quarter, million first bookings decreasing were year-over-year. in the X.X%

of bookings year-over-year, are consistent renewals, reminder, a down timing which with As were by impacted the expectations.

model basis. for fiscal our first under note second timing and $XXX the in quarter, heavily expect renewal in million by flat XXX. a renewal revenue $XXX approximately year-over-year bookings that million Total quarter of the is in was contract We was up which Topic variability impacted ASC for Please XXXX. revenue on

profitability. compensation non-GAAP income and On operating basis, planning-related operating we non-GAAP year excludes which stock-based intangibles a $XX of QX, to operating representing margin, million a operating of expense, for a a non-GAAP of million to reported margin of fees, XX% the XX% turning $XX in integration compared a and amortization non-GAAP impact Now acquisition income ago.

in will fluctuate reminder, a the resulting revenue impact margins license timing As customer a of and the recognition due period-to-period on quarter. given to renewals

This compensation consistent increased in fiscal in and fiscal around note is our Additionally, year please on Antonio's with expected expansion line the our was was expenses, expenses headcount that with guidance. driven increase by initiatives 'XX. commentary in and XXXX costs, increase

to per that in $XXX non-GAAP net million note income periods $X.XX was compared of in income to per share was non-GAAP the $XX $X.XX net Non-GAAP quarter or share a the or net ago. income year between million difference change Please from year taxes our of a which first the tax mainly in in computing driven fiscal by to XXXX. second lower quarter quarter approach originally income occurred a due to compared the benefit the provision, ago, our in

the Turning balance cash to quarter with $XXX reflecting share $XXX of of repurchase repurchase and sheet. share impact ended program. We million the our equivalents, our approximately under million cash

facility. on $XXX we In available addition, revolving our had million credit

our During under we in XXXX. $XXX approximately purchased year shares $XXX XXX,XXX announced share the for fiscal quarter, million million authorization repurchase

We our full note in ASR also settled quarter for XXX,XXX that the accelerated to $XXX in million shares. Please share was repurchase receive the program million XXXX. program $XXX paid in an additional fiscal

million of cash we operations million flow, of from cash cash and $X quarter $XX For cash a and in free the free in $XX generated to flow million operations year ago. compared $X flow from in million cash

available line As the due our QX collection period. Antonio lowest of was been cash noted, as this has historically expectations, the flow to cash in for amount in quarter with our

Slide to close now I Turning XX. to would with like guidance.

free least million reiterating year of metrics. full and XXXX, our period. growth we target the ACV all outlook the are least a includes For This at fiscal across $XXX cash for at of XX.X% of flow

of $X.XX least at of bookings in total renewal billion, bookings expect with fiscal for XXXX. to continue up We $XXX million

$X.XX increased guide no prior quarter EPS the share There the our to from range GAAP was first reflect impact in Our our repurchase has to EPS. impact of activity shares on by non-GAAP outstanding.

our For XXXX on IR website. refer and complete overview our a ] guidance, earnings [ press to presentation of fiscal available please release our

the historical the expect that XXXX linearity to earlier. contributions FSC remainder Innovation As performance. onetime adjusting in a cadence discussed of consistent when our [ I about investors for think year, fiscal includes with ] we continue the from This QX for

half generate in expect ACV low-XX% of new the to range XXXX. the fiscal We second net in

overview that provided fiscal our with around second impact linearity expect presentation quarterly half XX of in guidance fiscal earnings XXXX our Please for the will call. our last investments to XXXX, our on our we the we consistent detailed begin earnings refer expectations. we addition, assumptions year from In the see to sales of Slide of a

also trends most year To attractive With profitability Antonio we in objectives. for I on start strategically long-term wrap supportive asset-intensive to will the targets great investment our growth our and fiscal many industries over that, a growth our to it to to comments. turn to is different XXXX. remain position back of believe delivered We of full up, year which areas impacting today, solid that meet in investing We while are should AspenTech a for of and important future. support generate closing from levels the ability benefit largest foreseeable track

Antonio Pietri

Thank was a we double-digit QX you, ACV quarter, Chantelle. once growth. solid where again delivered

year expenses for expansion shifted profitability and over 'XX. fiscal investing foundation also year, our Following focus our to have managing areas initial We're in in best-in-class time. growth our drive we building that execution our return can while to

to our across markets. report pleased for resilient solutions demand end are that We most remains mission-critical

continue also different today. to I areas growth of on signs see have We of in touched as encouraging sustainability,

Our targets. Q&A. team year going to and forward, will is clearly fiscal in helping With our with for open our we we Operator? their initiatives remain confident sustainability customers guidance up it energized continue 'XX that,

Operator

you. Thank Blair. with The Matthew comes William from first Instructions] [Operator question Pfau

Matthew Pfau

seeing of wanted momentum Is by initiatives? being any much First, is these perhaps how business with CapEx that to sustainability, new on year a size and there to I some compare to you're how driven And ask the ago? investments. does way

Antonio Pietri

thoughts then me that, let add Chantelle Matt, Yes, can her as and well. address

to these we OpEx as that the opportunity, us we sustainability all, total size market So investments first from internally the -- are built. certainly, an CapEx addressable well believe initiative and to of plants that will have as come eventually

manufacturing of role in APM play chain that. all and a Our supply solutions will

initial little the that we're bit our the high-velocity have investments is we're those organization, and are also And what seeing already that near facilities that in customers for opportunities sustainability CapEx engineering running. is through of design inside Now seeing flowing assets. sales front-end from a opportunities our MSC and in We're benefit organization. cases seeing for sales the term, different use

technology, Our seems these of advanced a customers. some be target control again, for to

the this us for really is that broader to the market our that we the in And sense the reason opportunity But that of the over high organization, sustainability -- general, today investments we which capture do is position specifically targeting a we're have. are eventually have that amount in throughout for market to generating. velocity business better sales that in and

Chantelle Breithaupt

Yes.

only velocity is And add, specifics, definitely high we and engineering specific the as more to, first, your that Antonio, Antonio expand. would the where a to the macro falls MSC is, measures. think look in I yes, and thing Matt, into for those level suite out as we such that then us, land point at sales are eventually referred I build

And our Last the strongest out XX. strongest engineering quarter, has we saw XX the and of This suite is growth. was said out XX. It stronger engineering even of of quarters.

where a of that macro bolster had there it and some Antonio specifics that's it then we together. at So see kind level, suite

Matthew Pfau

thinking Very seems about I an how on Great. now wanted like also helpful. And acquisition gone has just acquisitions get you're integration the to is going well that Micromine perhaps Emerson then update and away. it the

Antonio Pietri

ahead, Go Chantelle.

Chantelle Breithaupt

committed it's that and we're in focused the still a We're of on. to still sense part M&A what for looking Yes.

everything tuck-ins from the use as can think at. think we're to to to we time tuck-ins pieces but that list And committed definitely from market, of larger I capital. to larger We primary have waiting a things we we that perspective, them we see always that from have of a looking -- -- we're our remain have pursuing I that Matt.

it's a capital allocation part of So good strategy. still our

Operator

with Rob comes question from Instructions] Baird. [Operator next Oliver The

Robert Oliver

I this conversion One, that now update contract expected business to SSE an a wondering be moving and was legacy fiscal year had And I big the is know if got contributor with in obviously term. guys that perpetual the last from period timings, us to into you year. you growth a through that ACV you're could I X. provide to for

can I I a far. then know quarter only to just but in, So wanted have quick get update how we're an I X on so see is progressing follow-up. if that And

Antonio Pietri

let Yes, take that. me

of quarter our of 'XX year last certainly in the an those ACV year flowed align [ the important transformation recognition way in cleaned we as fiscal SSE, QX decencies. lot the ] with the spend 'XX policy. up QX the the fiscal look, benefit So A happened to And contracts renewals the we in quarter.

we big fourth quarter fiscal So SSE the from results SSE. be a hope quarter -- for a expanding see on expect business. quarter the And our we focus where the growing been to to we've 'XX and QX

gas. of course, the also but national the lot on naturally production, we're replace is increase about it's said investment, expand have look, But oil term investment with only, not that will on excited flowing we're SSE, especially oil benefit it's only CapEx seeing not which as a to length, for impact growth companies, production oilfields Of targeting an a is the And have on the what would side as and the to a ACV, we're but I of call, deplete. equation. to revenue lost

then the is of capture also geothermal sequestration, use carbon And around SSE energies.

a of starting with the in resource. as subsurface well We customers are to as -- engaged couple the hydrogen store SSE also to using a possibility storage

the work So about the the But the we and it we quarters we're focus we that and in of SSE. SSE doing now, to right expect we most QX that have on all we're optimistic renewals see for that as see. QX potential

Chantelle Breithaupt

add pleased model perspective, of thing is I seeing, -- we're a other on And we're that too conversations other think from with that Rob, the initial I kind Yes. X would tokenization. the

and the add perp how with now is mentioned as to term, progressing going. doing I pleased far conversations the SSE would well transformation term only token, that we're to agenda. thing you tokenization and That's as as So then are

Robert Oliver

quarter, impact color had really X That's helpful any I Antonio, your just on seeing not you what's Middle going Helpful. I comments, in follow-up know then appreciated you. East. last the And for from Great. And made from kind to just update to moved those you only guys of Russia, curious think And Russia. be you. from was geographies slow. an X would to renewals and hear China I on I China some comments relative and both.

Antonio Pietri

happen. comply is to happened renewals, renewals and said, to in requirements just we're that working last continue QX already announced government. U.S. to monitor a with that case. you sanctions any we're going renewals-only quarter, there on the and the Yes. to some from we we as move will Look, sure we And And Russia, continue look, also to business, that make

China, grow companies, Certainly, government for sourcing to On that in emphasis is interesting an the meaning in technologies, companies. look, is continues local Chinese But we our local by Chinese also China China. driving business on see Chinese customers our and developed which and continue still to we that do the our between differentiation any innovation technology, the and native capabilities to country speaks buy exists products what in locally believe I there.

So...

Operator

next Ridley-Lane [Operator [ comes question Bank of Instructions] The from David ] America. with

Unknown Analyst

there understand number a understood David us investors But Just Andrew on more put year for of Is way about Emerson-driven saying there of is wondering ACV This help bit channel half? that Delta is ago? Obin. is a competitive the that expect Was back you're a ramp In you versus Ridley-Lane Emerson had of contributions helping the from are sort of building. V in to kind that the at customer. and how the the is the little more better opportunities of displacement how in that today? sort pipeline opportunity context, that

Antonio Pietri

lot first mean, fiscal and Yes, reference me you what work say that example. their the in the lot start is I companies to of an look, We own mentioned and sure. considering the X trajectories on the X in markets. -- of expect fiscal that was I now 'XX of possible, seeing benefit, organizations We is what some in 'XX. a goodness that synchronized we let say happened a would of

typically huge that excites AspenTech paper That market and systems in me as you core pulp has saw. installed all is a market, is but the other in What reference, that excites us markets, base our pursues. Emerson only the was a market, not and of of which not in

a technology base that huge systems Emerson V opportunities in So installed believe maintenance are Delta systems, power. systems, base also we huge capabilities of installed organization for the management base installed maintenance especially base. Huge of of has the solution Emerson with solution. and Mtell organization to installed and the It's different engaged all account our The teams. sales that access now AspenTech asset performance Asian

Emerson And also standpoint look opportunity, the we a determine very that end possibility about you of customers then to conference But Emerson. for know installed something this are there from the and need excited next talking that estimating during up be our and of the between year. to global have we'll base April is what what's AspenTech. about is coming at AspenTech And possible the at

their So into to installed and that then accelerated how AspenTech come, be it's base. but more base about installed can

Unknown Analyst

And putting then of proposals were the that management the bookings license there sort And license any is digital how on levels quarter? of this customer update term for pipeline, meaningful an receptivity perpetual just across the table? grid you're

Antonio Pietri

us. the we Look, licenses Yes. for is expectations a fact a is exceeded that continues that This around perpetual happen for quarter our be the years. play That to -- transition we DGM. for will over many

to others. willing than go customers more term are Some to

the contributes certainly, a around from GACV And generates the in to normally upfront licenses. want somewhere licenses, that but is support perpetual I license what cash revenue, also that's that is to contributes flow, free to perpetual But it of the those agreements. emphasize maintenance XX%

be So there perpetual DGM in benefit term, have business an important reflected from expectations that will is is of eventually, we course, prefer year. in that licenses growth all the to for while, the

HAT, But negotiations perpetual look, a that familiar therefore, licensing our was Customers -- a it XXXX, pipeline the the longer. for licenses aspect terms say with model in customers. with it's and XX conditions. There's beginning get happened it new the both is term. like supporting about and I'll term, What get of with takes years to model, little have familiar the And to have ago.

have term deals as engagement saw well. good and quarter, good around in the We we business

good but over So years, happen that is look, this many a will transition overall. benefits

Unknown Analyst

more And if in. I could squeeze X

and I today, to the for sales velocity you high sign you're expect the if around projects go incremental around and build as understood tokens comments these up So year? engineering you your to construction firms through that force, sustainability starting

Antonio Pietri

We very tokens. bullish driving And find Yes. use flowing therefore, Yes. EPCs it's to -- CapEx more sustainability to be how is about of them. the

EPC, an This about, made of that is One strategic And they've of hydrogen. doubled -- green very X-figure entitlement talked the with on references with they entitlement. decision AspenTech. customer a focus while their to doubling we not that customer growing a is

absolutely that through growth, we so So our to going more and it now forward. benefit to expect be flowing is more continue and

Operator

The Jason comes from Instructions] KeyBanc. with [Operator question Celino next

Devin Au

Devin actually tonight. It's for on Jason

the just to kind at on basis. on a any of the year, big I little on really want going can year? growth want confidence But And half and I when growth of just start decelerated that I balance a other the half. year-over-year detail quarter. in ACV to look share think off, to Just have pretty you the a to in bit little accelerate giving it mentioned is commentary expecting back ACV second I the a mean you get the what's more SSE you

Antonio Pietri

Chantelle. Go I'll ahead, help you. Okay. And

Chantelle Breithaupt

Yes.

the the of I year any if X% year-over-year, look last you QX think and color, at SSE -- when the growth X.X%. you add a we in current take the point versus to period remove if benefits the you the transformation had actually additional I've -- onetime QX Inmation, commercial

perspective, growth. with really a X% look I the So it's at which and X.X%, organic run if critical you that business underlying growth, from to pleased operational expansion of we're actually think is

Antonio linearity year, talked that remainder then DGM the year. If from the the And term the year, the will sales. benefit QX you QX, aftermarket things of the we color. everything look productivity there pipeline several stronger of half. second the of had confident HAT are sure I'm in sales about, pipeline some last both and has terminals growing investment in, in in we're and traditionally in at sense add ramping the SSE the this The But QX

to if add quite you any Antonio, factors. a And few want those color see X we things? to So

Antonio Pietri

very Chantelle here. happening mean, right. we're I'm about I -- what's Yes. is excited. excited Look

a building there's course, Of foundation now because, $X.X AspenTech $XXX lot way, expansion million in the of related and a from in revenue to overnight. and billion ACV accelerated

it's now So expansion.

announced they're OMV in me Europe, organization. excites sales last Inmation QX, But in look, If improvement On focused this benefit. and and QX sustainability. were performance release press with incredibly sustainability of you apples-to-apples installed of type said, look, of have partnership you basis, benefits biofuels to in 'XX, -- but inorganic where flow doing year. significant SSE, other we our is, the starting but base go example, of fuels, and customers around cases. benefits in we're it's our our look velocity synthetic working benefit transformation on okay, the through are But from there high the related the to XX% also if Today, QX quarter Austria to a what Chantelle an on at for that see customers there as you versus use many then

believe engineering there significant will also sustainability and they not benefits. to in but only APM. also have, -- an in will I benefit MSC be important So SSE, well, as believe

entire the Spain. country. that world, I the for North India months, have transportation, network the that and well. gas technology, managing last technology customers, market DGM The is entire have Latin DGM our largest had in largest at is look and is the the we as distribution is in to around talking our India, we XX over Europe for months by travel the of we've as you manages the America opportunity the around in If grid in XX%-plus the and world managed network customers distribution, X India And We responsible Look, the entire meet synchronous but successes This manage as also in over grid. DGM Monarch -- I grid last transportation technology opportunity electrical XX incredible. the the America. I the -- in with share

only sales [ And expansion sustainability. outside of field the to North in happen well. HPS the future ] started our America outside We're we're pursue years is that as And to opportunities, and America. organization North about will continue of getting doubling of in

So look opportunity electrification and as we starting very the macro and flow to the at the technology all that of CapEx indicators, the around are and the sustainability we have exciting. is global that quality

just first completed point look, QX XX we're QX, now our quarter, and months that QX. made, So the year and and quarters. Chantelle We is is about excited this X a

Devin Au

clarity here. appreciate Got I really it. Got it. the

X quick Just follow-up.

the last of those interest the and in cross-sell interest cross-sell pipeline capabilities. and some I'm your some of kind seeing into crystallized refining curious more I you in mentioned also looking quarter up showing here? if quarter, think the just in term microgrid good customers management the from or chemicals near

Antonio Pietri

around that months showing last when the look, that I out the our it conversation a that has really it in of in a meeting the it because capabilities but India. India. that last more technology to and will had around actually the microgrids. maintaining customer now transmit they the be distribution for Yes. HAT is are found with in electricity is of And week up was the keeps fact happen pipeline the years. think I Yes. customer a the our microgrids, for in we electrical imbalance. the India And been will technology road importantly, in -- down No, XX -- started responsible It on India that X to X some mean, in Also operations, exciting for in of to -- our I cities grid the fact managed customer. lights very we major more

And therefore, capabilities they though is huge own power renewables, to renewables credence them, because this and been their incorporating well, utilities company. start investment around that so there gives power chemical the to can as their bring bear they as customer we making historically generating start that in a even from credibility petrochemical as gives solar microgrids own --

opportunities only down road. to be so and an also pipeline customers again, -- of will But in are this starting is to the be these, about the opportunity. those So learn all going

Operator

[Operator Instructions] comes The with Research. next from Tilton question Wolfe Josh

Arsenije Matovic

on is Arsenije This Josh. for

higher would quarterly attrition net significant just confidence of think half, outlook, largest ever XQ Can expected? net new the a the provides what Because follow-up. implies a with reiterated up of largest that I second And that be step-up on as second you brief in especially a realized. concentration you it in ACV range seasonality, at as in the and then XQ. quarterly elaborate increase ACV step XX% Looking new

Antonio Pietri

of reiterated QX talked also of the we and and QX, year think linearity know look, what some there's by it we reasons why about Well, QX I right. Chantelle way, All the think and -- means here. yes, not the but I for the QX only

our from pipeline about of of business, in SEC think progress the this also into X renewals and OSI general. across is the QX. we've then sort HAT, Look, see SSE. all incremental impact something that is area to historical significant -- talked putting to And sales that the And more our QX. hiring, QX, and then been starting in headcount since We pipeline that the is continuing immediately, beginning I okay, it of businesses, we've the in grow is made

QX DGM those mostly AspenTech months. fiscal we name for customers way, the point. inside of flow, that the about in we'll SSE, The say change for DGM cycle talked HAT, want in you're very any I'm is DGM. much seen XX, But to business, customers look, year long. the by at sales a But is of our historically, about of Frankly, installed, in projects it, once that And The is because a team some sure is way sales and to that the the new initial DGM business. accelerated. We XX seasonality then in name opportunities end aftermarket. also more most there's of that customers RFPs something I aftermarket haven't sales.

shorter it to is area a new adding headcount. X applications already more sales can is new X we're what's is months. capabilities Sales significantly increasing XX months, or business cycle normally And business, but once installed cycle installed. that there, to But you're be an even add-on that's

area I is expect the the to we some and QX that And But we accelerate then So be But have the deliver to because business important. growth you one, see an of important well. there. see cyclicality headcount incremental the opportunity very benefit linearity the the X this as have we focus that eventually we're seeing but in And -- don't of is where year a outcome. QX final in also because is QX still important, building QX and an to quarters. to of are on course,

Arsenije Matovic

this strength Got fiscal you DGM, Also, still million color the assuming quarter, the perpetual 'XX given tailwind, was in in into that because of license. ACV probably bundled, there it. it thinking license could perpetual on how $XX.X I QX. provide mentioned that was you mentioned you there And DGM license? When kind I'm this of strength in strength SMS been quarter, would think last have some perpetual DGM strong in year, about ACV perpetual was

Antonio Pietri

that we'll DGM, reasons. to like for to some we other of engagement with a continues believe mean, focused customers, DGM, my to successful. And solid be business this be globally in what is and from the or our very we're as the headcount number quarter Yes. had exceed quarters performance in in our through HAT, for I meet and quarter But tracking Look, we interesting. year that's as expand many normally, own I said, outcomes be a going by think We can customers on. exciting I we're We engagement this areas. disclose and don't because given interactions that with with very fiscal areas customers, still and is in business historical

Operator

with comes Markets. question from next The Instructions] Loop Schappel Mark [Operator Capital

Mark Schappel

turn business. just wonder want could like bulk seeing overall pressure, your speak if chemical talk that the the or to market then their address chemicals. chemical parts I I likelihood And to most also of if Antonio, hearing your to you you're say, you're the specialty businesses back customers respect also what you chemical snapping chemicals, year? potential to with next ag chemicals, could of from maybe the

Antonio Pietri

earnings the that positive to Russia-Ukraine a I months, had a chemical back from where If with I no you the I of Look, last these And customers. sort narrative chemicals, and destocking Yes. and the chemical more to the of depending a of region. for do demand. positive the the last over the think remain Yes. was It doubt there's if of less weeks, XX little couple was, customers do over war think area so. [ X, on. calls a think Aspen customers, there's X listen on from cost weeks, herd Europe, so bulk that's In ] of Chem implications lot or bit

improving Now around shoots and the what chemicals. hear demand, customers see -- improving of of bulk demand starting to we're the sort from green is

solid. that's remain from. And to sustain commitment between investment And also because down to we through ability CapEx continued longer-term differentiated a OpEx. and again has versus chem investments spec think that's benefit even this their they've I their what cycle

I between benefits question and tremendously I Emerson So Emerson benefit AspenTech. for been investors OpEx. believe know that's We from CapEx. a from

sure season. -- Therefore, macro not Now clearly, a next there's fiscal their subdued their budgeting over that year. will outlook X, to equally X the more around months. environment see. so these you're we're And demand calendar their year, But hear remarks change of than dramatically. But in last next bit starting positive heard we'll might for little we've be companies for chemical I'm here budgets the

Mark Schappel

I flow just if customers, noted That's that helpful. Last quick. has wondering And on it there the that print to this that longer bit in it's little was to then based quarter, and a were Chantelle, particularly I few think just quarter, quarter? a whether trend cash And corrected pay. Asia, good real this fair was kind assume, Latin were itself America of taking

Chantelle Breithaupt

we've in to we that amount think QX. expected I seen see the

countries from If said expected pay what you the late. over QX remember, and met from we a of that I kind it few quarters, those the QX come would in

absolutely and pleased performance. it with think cash flow I in line, our QX was we're free So definitely

Operator

Instructions] The comes next Naing Berenberg. with question Soe Nay from [Operator

Nay Soe Naing

please. on which I got you you opportunities sales was my into? mentioned, if of bit that the is the the question performance or also force, particular may. share I've more I X, strategic with color could I wondering parts second there the a of the high-velocity If And is pursuing? that could business. business divisional start then investments are investing on organization any the you're segmental that if sales And

I you up about year-on-year. a really strong I -- had engineering correctly, the quarter, was if XX% mentioned heard think you I think

of could rest the high-level get business, the if for update some So I please. wondering segmental

Antonio Pietri

want [ ahead, ]? lever to Go do Chantelle, you

Chantelle Breithaupt

Yes. I just didn't want it.

areas I So a investment. pleased investment an very of specific we're from think perspective, few with

and high very which ventures, the there, start-ups, is the that us growth. opportunities are the and logos for land mentioned, seeing the new other sales, that exciting X of we you velocity mentioned year, some as that the plays we're of very we we're of new first ramp kind expand headcount new through much as and seeing. some The those for

X those definitely velocity So for high factors. sales

QX DGM area investment intent with other since mostly an rest we to on Europe. continue is The world that ever business, of the

Europe sales pipelines. into with been and built pleased we're out we've on of closed for investments the that's team the sense work continues going So and there made to the

then the DGM. And related third ecosystem up sales for the that's services investment to is setting

with sales, and with the so delivering related growth And sales, pleased And the that's the those to to those are specific get we ones. can being we're X things enabled.

commented engineering you quoted. we're But very commentary? the some anecdotal you think the there was if the highest could correctly, last basis, specifically I perspective, growth. is I given generally, the this Antonio, amount from pleased a growth We usually we provide so segment that concept quarter not but with don't segments question your the XX, that maybe for understood disclose engineering over quarterly a on

Antonio Pietri

we've I'll going as take sales stay I'll also both as company. result sales level. Aftermarket HAT technology. And overall sales headcount material at look, enablement. that with number sales also the significant flowing best expand organization as make Europe. since into combination that's an we're start as inside And a mostly significant a a bigger mean, learned HAT head it in that's count scaled and that also adding as then Emerson Middle to say something the productive, of Emerson. well all because for enablement that. on, field use is of America, there's of well, sales with a a accelerate to way, but sales sort we from making certainly, South fact, our how consultants practice for from believe I we bigger also enterprise will they've of But matter able a East, We're while in for sustainability Well, people how traditional of in number the some which these it's we're internationally increase our they DGM. we Asia. of investment into in focused have do headcount a other a that the DGM, a we've And parts increasing takes that sales, area. Look, and Yes. Latin just high organization, been in the And much increasing sustainability relationship that we the through opportunity a cases But

very moment. and in it's exciting So time I'm encouraged, AspenTech at the an

Operator

the I further to time. questions remarks. at to show closing back no this I for like now call would turn Antonio

Antonio Pietri

double-digit the our for chemicals Thank believe like ability at -- in grow of to close. the our across least you, it's ability year, as macro I ACV producers. We're highlight our Look, operator. deliver chemical growth we here in our improving to XX.X%. by on to the said, and like guidance to macro I'd for And encouraged industries. most looks very indicators bulk Again, demand

good. So that's

to playing, that I world at talk for will side now DGM electrification customers, just the customers marvel playing global around are travel relevant and is Aspen or I how to technologies we and we the As role be increasingly in area.

be Certainly, real. the suites. to of sustainability But starting CapEx there at which business, benefit some is bigger world regions overall, others. our making is moment OpEx that, sustainability flow. investments will with our eventually, MSC, APM this will are think I the than And

look, There's work confident. And lot then overall, of here. happening a very

expectations. then in the to And exceed about that focusing your in execution fiscal expansion. and Now remaining we time it's the have year

all, point to with forward you want talking future. look So I some thank and at the that, in to

Operator

you for Thank conference today's participating. This call. concludes

You now may disconnect.

Aspen Technology (AZPN) 6 Nov 232024 Q1 Earnings call transcript